Thank you, I have no intentions of closing just yet and I appreciate the support and advice, I just think I really need to get more in depth accounting  data to support whatever decision is next. I have given myself 3 months to figure it out and hopefully whichever way the data takes me it will be for the best. I thank everyone again and have a game plan,

 

1. figure out the numbers with regard to profits in comparison to walk up vs preorder

2. Get a mentor through SCORE

3. get a volunteer and lighten the load

 

Perhaps then I will have a clearer picture as to how to proceed

Good luck to you Mystic, I don't know about you, but sometimes being a business owner feels very lonely to me. I think I may contact SCORE, myself.  You mentioned possibly bringing your business home. There are certainly advantages to that. But I work from my home kitchen and yearn to have my kitchen back. I'm so sick of my kitchen being taken over by this business I could cry. That may sound silly to some, but probably people who either haven't done it for long or just do it on the side.   Yet, where I live, I'm terrified to try anything which adds to the overhead because the cottage food law here is so liberal that everyone's making cakes and not charging.

 

If I was to get this out of my house, it seems to me the only thing I could do would be to also have walk in business. I don't want to compete with the already saturated cupcake business, so I think I'd need to be a bit of a cafe with good homemade style deserts. Or something. I've also considered making it a full time little girl's party place, also..

 

Anyway, please keep us updated about how things are going.

ADepending on what's available in your area there may be an intermediate option between a home bakery and a full-fledged retail shop: renting a commercial kitchen (usually by the hour), handling consults and orders by appointment only. This option removes much of the overhead of a retail storefront while still giving you a production-ready commercial facility outside your home.

The trick is finding available kitchen space...most major metro areas have at least one standalone commercial kitchen incubator or rental facility, the alternative would be working during off-hours in the kitchen of another existing business.

Were you talking to me? Thanks, but I have rented space in restaurants before and I need all my stuff. I have a ton of stuff. I even have two other rooms dedicated to my business, one is just an office and the other is packed with my stuff. Stuff like cupcake containers, cake drums, ribbons, pan liners, dummies, cutters, cake boxes. If I had to figure out exactly what I needed and lug it somewhere to do my orders, I would probably have to be put away somewhere and heavily medicated.

AIt was mostly directed at the OP. But usually a commercial kitchen rental will give you on-site storage for tools and supplies, we never had to lug anything back and forth in either rental facility we used.

Real estate is pretty cheap here. I could probably rent a whole space for what that would cost me here. I had found decent one for $625 a month including triple net, but it was bad timing.   Anyway, I'm going to stop hijacking this thread!

I hope you don't mind if I throw out a few thoughts. Maybe they are flawed..........but than I hope someone else will see that and correct me.

 

The first thing I see as a problem is the constantly losing business because your under staffed. Every time a person walks away because you can't accept their order is a huge loss, in my opinion.

 

a. they may never come back and ask again

b. they may tell people they know to forget going to you, your always booked

c. once they go somewhere else they might like that place more and never venture back to you

 

Those people are people you got for free in spite of what you think is a poor location for your shop. You didn't have to pay advertising dollars to get them, they came to you and you lost them/gave them to the other shops.

 

So, what good would any advertising now do you? If you got more business, you still wouldn't be able to take it.

 

You definitely need more qualified help! You can't run a business if your the employee too. Some volunteer help isn't any good, if they require your attention in anyway, so don't take volunteer help that isn't very good. I like the idea of getting interns but they can sometimes take more time from you than a volunteer to guide/train. What you really have to do is work on finding the right people. I've met talented kids and adults with-out kitchen skills that can be more valuable to you than someone with "skills". Looking for smart people, people that can take directions and run on their own. Just because someone has experience and or a culinary degree does not mean that they are a smart hard worker. And someone with a culinary degree might actually be terrific, you never know until you give them a try out. How about putting out an ad on Craigslist for min. wage interns? I'd hire every person that came my way and give everyone a try until I found a couple really smart hard workers....regardless of their resume'. You have to be ruthlessly tough to weed out the bad job prospects and keep the best.

 

While your taking on these min. wage interns take every cake order that walks in your door. Force the situation to get the work accomplished. If the first intern can't get those extra cake orders done, hire then next........or maybe hire multiple ones at a time. Make those new employees get the new work done and than get them to do your jobs work too.

 

I know you think you need to get a loan to hire, but if you took on more business it should cover that employees pay. Every employee needs to generate enough finished product to cover their wages PLUS pay you a profit. That's what being a business owner is all about. You shouldn't do all the work, you should be the brains that hires the people to do the work.

 

Moving into a non-store front kitchen means you HAVE TO advertise and drum up business because no one will know you exist, with-out doing that. I wouldn't do that until it was my very last resort. You've already got your investment established in your retail operation which does bring in business. Going with-out a store front really creates a different kind of business. There are many countless good things you get from having a retail location to give it up (now). How many of your custom cake orders come from people who first bought your cupcakes? That 40% could be a priceless lead in for your custom orders!

 

I also do NOT suggest going into wholesale work with the issues you currently have. Wholesale business means 50% less profit per item. Therefore you must make twice the amount of product to equal what you make selling the same thing at retail. And you already don't have enough staff. Wholesale is pandering to the smallest profit margin and more production......it's guaranteed to kill you.

 

If you are getting enough business that you have to turn it away; that's what you need to aim at, stop the bleeding. Are those people coming to you because your cheaper than the other shops? You need to find out by getting your prices equal to your competitors. If your clients keep coming and you still are turning away business that means to me that you've got something better than your competitors. You need to figure out what that is and take better advantage of it.

 

You should be able to figure out your losses on stale cupcakes in a week or two by keeping detailed info. on those numbers. I would guess you've got this stream-lined enough that your waste is minimal, no? If you've got 1 employee making 40% of your numbers just think what having more employees could do. Again, let them work and make you money, instead of having a shop just to employee yourself.

AOP, could you explain why you don't accept walk-in orders for custom cakes? Are you handing them an order form, sending them to a web site, etc.?

AI got the impression that she meant she doesn't have cakes in stock that people can walk out with on the spot.

I somehow missed where the OP said she was turning away business.  I thought she said if she had more help she could accept more last minute orders.  Last minute orders could be turned down by a lot of businesses - there may just not be enough time to complete it.  And I assumed she was not working to capacity if she was interested in spending money on marketing and advertising. (I realize she said she was working 16 hour days, but I didn't think that was 16 hours of baking/decorating time).

 

Without specific financial data, I think raising prices would be the first step to making the same amount (or more) money in less time.

 

Liz

AShe wanted to use the loan to hire staff too so that she could take on the business she's currently turning away.

I can help you change some of your production methods to increase your productivity. (I understand that you are proud that you don't freeze product, but your wrong about that. That's a myth and something inexperienced bakers fear incorrectly.  Freezing is very useful and not something to be looked down upon. In fact, fresh can sometimes taste worse than frozen. Although, it is something you would never advertise because most people don't understand it.)

 

Can you explain how you go about producing your product currently?

and fwiw--my opinion of SCORE is that at best it is a very basic bare bones business resource--it is not the cavalry.

K8............I thought you knew who I am, from Eg, no? Been baking for too long...........

Sorry, I missed that post about turning away 20% of business!  I even re-read this a.m. before posting, must not be awake.

 

I agree wholeheartedly about the freezer . . . I prep in bulk and freeze, and it is a lifesaver!

 

Liz

Sorry to hear you were ill K8! That totally stinks. Us old ladies gotta teach these young ladies about freezers.

 

The freezer is more important than your oven!

 

You have to know how to use it as a production tool........it's not a place to store old stuff you should have thrown out. There's lots of misconceptions about it. There is no major bakery that doesn't use them.

A

Fantastic point Stitches! That one practice alone can dramatically change things for OP. I think freezing is one of the most misunderstood practices in this profession. I developed my recipes around freezing even if it's just for 1 hour. The difference it makes for me in the texture and development of flavor is so significant that I feel the cakes are much better after. Not all recipes handle being frozen though. I found that out while I was doind the bulk of my product testing. Imagine how many last minute orders can be filled by just having the customer return for pick up in a few hours. If OP is concerned, you could consider freezing only up to a number of days you're comfortable with and then pull them out for sale. Once you have an idea of how many layers you tend to use over a certain period, you could make that amount of extras.

thanks, wendy

 

seriously--not to hijack this thread but while there is a fair amount of mass hysteria in baking  the freezer thing blows my mind--how else can one survive

 

but to op--yes i think just focusing on your one avenue of revenue is key--just pick one--while it might seem that store front walk-in products and custom cakes go together they really require two sets of priorities. keep it simple is my thought for you which you already are trying to do ;)

AI agree with using freezers. I'm probably considered a 'young' baker, but in the bakery I work for, if it weren't for the freezers, we would go crazy, falling over each other trying to get stuff done. Heck, I have more free time now that I've caught up with most of my production. My hours have even been cut because of it. So yes, freezers and certain shortcuts are actually OK. I worked a bakery once that refused to take any kind of shortcut, and we were drowning in work & miserably behind on everything. That bakery is closed now because they couldn't seem to get anything done. Customers don't have the patience to wait until tomorrow for a cupcake.

A

Same here, I also re-read it but I missed that 20% figure. Given that OP is working 16+ hour days, still turning away business, and charging less than inferior products from competitors, the obvious solutions are improving production efficiency (consistent with the excellent comments above on freezing goods) and increasing prices.

OP, it might help if you shared your current pricing structure.

A

It depends on the size of the market you are serving, your profitability goals, and how much you are able to produce. If 1 million people live within 30 miles of your business, 2% of the population is 20,000 people, not including out-of-towners who have destination weddings in your area. This is enough to support a healthy market of cake decorators operating at a decent volume focusing on weddings only or other niches.

For example, local population size is the main reason I was able to create a successful bakery that focuses on people with food allergies: 7 million people live in the SF Bay area, and 1% of the population has a severe food allergy, so that's 70,000 affected families with birthdays every year.

On the other hand, if only 5,000 people live in your area that might support a single low volume wedding cake decorator but chances are businesses would need to diversify and/or consolidate to survive and grow.

If I only sell decorated cakes to order that's going to scare away a huge amount of people who might be a potential future clients, but never will be.........because they aren't people who are comfortable buying completely custom work from a place where they can't pre-taste the work.

That's what tastings are for.

A

Absolutely...the distinction is not based on the product, it's based on the order fulfillment method (walk-in vs. custom). Custom work will almost always be more profitable than making a bunch of stuff, keeping it in stock in the hopes that someone will walk in and buy it, and paying someone to watch front of house.

If your supply is constrained and you are turning away more profitable custom work in favor of keeping products in stock for walk-ins, your what-if analysis needs to compare what would happen if you simply shed the less profitable products vs. hiring more employees to work on the less profitable stuff so you can focus on custom work vs. raising prices across the board to reduce demand. It's possible that more than one of these tactics will find their way into your final strategy.